"Citron readers know we have long been fans of $NVDA, but now the market is disregarding headwinds," Citron tweeted.

Shares of Nvidia, which makes processors for video games, fell by as much as 3% on Wednesday after the tweet.

In brief, Citron said:

Nvidia's growth has come from its gaming division and by taking market share from competitor Advanced Micro Devices, not from new markets.

There's "significant competition" from several players, including AMD and Intel, which could hurt gross margin in the new year.

Investors may be overstating the value of Nvidia's intellectual property. A patent cross-license agreement with Intel could hurt profitability in 2017.

Nvidia is the best performer on the S&P 500 this year and is up 245% year-to-date after Wednesday's pullback. Citron said it sees the stock heading back to $90 per share, down about 21% from current levels.